Suppose S = $100, K = $95,8% (continuously compounded), t = 1, = 30%, and 8 = 5%. Explicitly construct an 8-period binomial tree using the lognormal expressions for u and d: (r8.50)h+oti u = e d=e(r-8-50)h-oh Compute the prices of European and American calls and puts.

 LO.1